Growth gone wild?

ST. LOUIS – In its most recent report, “Chickens, Cows, and Pigs… Oh My! Implications of Record US Protein Expansion,” the Rabobank Food & Agribusiness Research and Advisory group gives its outlook for US protein producers.

US farmers currently are seeing record growth in demand for animal-based proteins, but producers should be prepared for when domestic consumption trends taper from now through 2018. Production of protein in the US is expected to grow at a rate of 2.5 percent annually, while consumption is expected to jump 5 percent.

But a stronger US dollar and questions about domestic demand for proteins will be significant factors for weighing on the industry, according to Rabobank.

“While we don’t foresee margins falling to the lows of 2008 and 2009 as prices decline through 2018, any producer considering a possible sale or divestiture should move quickly, as the outlook for margins and valuation multiples isn’t moving in their favor,” Will Sawyer, report author and Rabobank senior analyst, said in a statement.

“2015 saw the largest increase in US per capita meat consumption in 40 years,” Sawyer added. “We expect growth to taper in the coming years (2016 through 2018) and for it to be much more evenly weighted between the three proteins.”

Producers should be especially mindful of the dollar’s strength against the Canadian dollar, Japanese yen and Mexican peso, according to the report.

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